Written by Alice Payne
Posted on 12/05/2015

Consumer credit checks banned from disqualifying New York’s job seekers

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Last week, New York’s Mayor de Blasio passed a new bill into law that will ban businesses from using credit reports, bankruptcies and liens to disqualify people from employment. Signed on 6th May, it will come into effect 120 days later.

Supporters have pushed for this change, arguing that law-abiding applicants are being rejected for jobs because debts from student loans or medical bills have given them a bad credit record.

In 120 days, employers, labour organisations and employment agencies will be prohibited from requesting or using an applicant’s consumer credit history, in an effort to stop employment discrimination based on credit checks. The Mayor’s office argued that the use of credit checks to screen applicants during the hiring process “disproportionately affects low-income applicants and applicants of colour”.

Councilman Brad Lander, who sponsored the law, also contested the perceived connection between someone’s credit history and their eligibility for employment, saying:

“Credit checks for employment unfairly lock New Yorkers out of jobs. There is no link that can be shown between credit history and job performance, and now New York City law reflects that fact.”

The new law is, so far, the strongest effort to address this issue across the United States. Whether other states follow suit remains to be seen. However, despite being seen as a step in the right direction by many, there are still some exceptions to the law. For example, financial services workers, law-enforcement professionals and employees who have to be bonded will all still be subject to credit checks when applying for jobs.

Supporting meritocracy

Mayor de Blasio explained the importance of this law for New Yorkers and its role in ensuring the city is based on meritocratic employment.

“Every New Yorker applying for a job deserves a fair shot – and we are committed to protecting the rights of our workers and making sure that every New Yorker has the opportunity to succeed. This bill will remove a barrier to employment and ensure that people are judged on their merits and ability, rather than unrelated factors,” said Mayor de Blasio.

Too much interference?

While the majority of Council Members voted to pass the bill, a few saw the measures as a sign of unnecessary intervention.

“We cannot dictate to businesses what information is important in choosing their own employees when it could have a bearing on their suitability for the job they are seeking,” said Council Member Steven Matteo. “This bill, while well-intentioned, was simply too much government interference.”

Striking a balance

However, others felt that banning consumer credit checks for those outside of the ring-fenced areas, such as financial services and law enforcement, was an important compromise to help job seekers find employment in a society with huge volumes of debt.

Kathryn Wylde is CEO of the Partnership for New York City – a non-profit organisation which includes nearly 300 CEOs from some of New York’s largest employers. Wylde feels the law manages to strike “an important balance” that still allows “employers to conduct credit checks for the most sensitive job openings while reducing chances that a poor credit history will unfairly disqualify job candidates.”

The question is, will the rest of America also adopt a meritocratic approach?